Once the short sale package has been presented to your lenders, a negotiator will be assigned and the review and response period will last approximately 1 to 3 months. The lender will request an appraisal or an intermediary price (BPO) option to determine the market value of the home being sold. How long will the short selling process last? While all short sales are different, you can expect an average short sale to last 4 to 5 months from list to closing. Of course, I have approved short sales in 10 days and I have had short sales that took more than a year to be approved, but most traditional short sales tend to fall within some general time frames.
The time frame of a short sale varies from that of a traditional real estate transaction. It can take weeks for the lender to decide on an offer. The lender will then issue an approval letter detailing the terms of the agreement. Keep in mind that the pre-sale process can take much longer than buying a traditional home.
Even with a qualified agent, it's not uncommon for short-sale transactions to take six months or more to close. What is normal during the waiting period depends on the bank. Some banks obtain approvals in less than 30 days, while short sales from other banks can sometimes be completed within 24 hours. On the opposite side of the spectrum are other lenders, so flooded with short selling requests that their employees may not respond promptly.
If approved, the property will be designated as short sale on the sales list and offers made by the home will be sent to the lender and seller for acceptance, counteracting, or rejection. In a short sale, the homeowner owes more for the mortgage than the house is currently worth, and the bank has agreed to accept a lower price to pay off the debt. While this isn't a hard and fast rule, short selling is more likely to be sold below market prices, and with a good eye and careful research, you can save a lot of money. To sell a home in the short term, the seller will have to submit a letter of difficulty to their lender explaining why the mortgage cannot be fully repaid, along with documentation such as pay stubs and tax returns.
If a homeowner is struggling financially or if the home is in poor condition, the bank that owns the loan may allow them to sell the property for less than the outstanding mortgage to avoid foreclosure. If you are the lender who sells short, you will receive a response about short selling within a few weeks. Some homebuyers choose to endure the complications of short selling because they could buy at a bargain price. ONCE the buyer is insured, the average approval time for a short sale, in my experience, is about 6 to 12 weeks.
While the housing market has slowly recovered since then, short selling is still an option for homeowners struggling to keep up with their mortgage payments. Buying a home through a short sale is similar to buying foreclosure, but the two processes are not the same. For example, a homeowner who renounces the home through an early sale process can purchase another home through the FHA loan program as long as it meets the lender's underwriting criteria. So make sure you have your documentation in order before you try to buy a home for short sale, just as you would with any other home purchase.
If you're looking to buy a home and buying a short sale sounds like something you'd be interested in, you can start online or talk to a home loan expert today. The variables are so broad and complex that a real estate agent who specializes in short selling could only estimate the time from offer to closing, even if he were aware of the facts of his case. While you'll want to sell your property as close to market value as possible (and your lender will be okay with that), don't forget what led you to make a short sale in the first place. .
